A guarantor’s protection is a public good benefiting both parties to trade.

Evidence

This could suggest, in line with Dasgupta’s argument (this volume), that with respect to that particular transaction the protection the mafioso offers is really a public good which benefits both sides. If he did not act as guarantor the exchange would not take place at all, for the potential buyer would be deterred from entering the transaction for fear of getting a bad deal. The seller’s tip, in other words, might reflect the price he is prepared to pay to be trusted. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 2240

Categorization

Category: Factual Claims

• XREF: Strongly parallels the seller paying a tip to be trusted — the economic heart of why both parties fund the trust-enforcing institution, echoing reputation-bond dynamics from the Milgrom law-merchant work.
• DEEPTHINKING: Reverses the naive view that protection money is pure predation: it is a fee for trust insurance both sides rationally buy, dissolving the extortion/extortionless distinction in racketeering.

Related

• Sellers pay to be trusted when no other signal vouches for them (similarity 0.83)
• The mafioso’s guarantee enables trust and exchange in markets otherwise paralyzed by lemons. (similarity 0.80)
• Guarantors must keep trust scarce and attributable to themselves to stay in business (similarity 0.79)